Thursday, April 1, 2010

MLS Expands Designated Player Rule

Major League Soccer announced today that it has expanded the Designated Player rule. Effective immediately, all teams now have two designated player slots, with the option of purchasing a third. Here are the details.

Each DP slot will now count as $335,000 against the teams salary cap; $167,500 if the player is signed at or after mid-season. A team may use allocation money to reduce the cap hit down to $185,000 $150,000 (edit: this was changed from the initial press release). Until now, a DP counted as $415,000 against the salary cap.

A third DP slot may be purchased, using a luxury tax-style mechanism. A team seeking a third DP would pay $250,000 to the league, which would then be distributed as allocation money evenly to every other team that does not have a third DP slot.

DP slots may no longer be traded--no team can acquire a 4th DP slot. For New York, this means that we no longer have the extra DP slot we acquired via trade two years ago. New York is being compensated with $70,000 in allocation money.

Also of note, DP slots can be used to sign current MLS players, and Landon Donovan of the L.A. Galaxy will now count as a DP on L.A.'s roster--amazing! Finally, if a Designated Player is transferred to a foreign club, the transfer fee will first be given to the MLS team to recoup any money spent acquiring the player before the league/team split kicks in.

Erik Solér has already spoken of his intent to acquire a second DP after the World Cup, and we've been cutting salaries and acquiring allocation money for just that purpose. Now the question is, do we have the salary cap, and the desire, to acquire a third DP? Three DP's, at $1,050,000 in total salary cap, are approximately 40% of the teams salary cap. That can get payed down to as little as $450,000 if a team is able to accumulate $555,000 in allocation money. Plus, there is the added flexibility of bringing in a player at mid-season for half the hit in the first year of a contract.

What should the Red Bulls do now? A second DP is basically a given, and is a declared part of the team's strategy. But, would they be wise to commit such a large piece of their salary cap to a third player? Can a successful MLS team be built if 1/8th of the roster consumes 40% of the salary cap? What do you think? Share your thoughts.

UPDATE: Just a couple of additional thoughts as this all sinks in. First, was $70k fair compensation for our extra DP slot? $185k is the full amount of allocation money that can be applied to a single DP slot. Furthermore, a team is expected to pay $250k to purchase a DP slot. It seems to me that we should have been given the full amount. I will grant that $70k of allocation money does give the Red Bulls a meaningful advantage over other teams given today's announcement, but I'm not convinced it was fair. Not bad, just not quite right.

This also leads to my next thought: MLS has got to start making public the amount of allocation money each team has! Please! They need to understand that part of what fans love about rooting for a team is imagining and debating the possible trades, deals, moves, and acquisitions their team might make. It is impossible to do this if we don't know what resources we have. We never know if a trade that involves allocation money is a good one or a bad one because we don't know how much. Please, Commissioner Garber... help your fans to be more engaged and more excited about your teams by announcing allocation money when deals are made.
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